Subprime Rates


DEFINITION of 'Subprime Rates'

Interest rates charged to subprime borrowers, such as on loans to people with poor credit scores from one or more credit bureau. Subprime rates will be higher than prime rates for the same type of loan, although there is no exact amount or spread that constitutes subprime.

BREAKING DOWN 'Subprime Rates'

Factors that affect subprime rates include the size of the loan, the income of the individual, the number of delinquent accounts on the borrower's credit report and the amount of the down payment for a given loan.

Subprime lenders use what is called "risk-based pricing" to determine how much interest to charge on a given loan or class of borrower. This pricing method may change as economic conditions change in the broad financial markets.

  1. Subprime

    A classification of borrowers with a tarnished or limited credit ...
  2. Recession

    A significant decline in activity across the economy, lasting ...
  3. Subprime Lender

    A type of lender that specializes in lending to borrowers with ...
  4. Risk

    The chance that an investment's actual return will be different ...
  5. Down Payment

    A type of payment made in cash during the onset of the purchase ...
  6. Prime

    A classification of borrowers, rates or holdings in the lending ...
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  1. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Full Answer >>
  2. What is a subprime mortgage?

    A subprime mortgage is a type of loan granted to individuals with poor credit histories (often below 600), who, as a result ... Read Full Answer >>
  3. How many free credit reports can you get per year?

    Individuals with valid Social Security numbers are permitted to receive up to three credit reports every 12 months rather ... Read Full Answer >>
  4. Is it possible to get a free credit report from Equifax?

    It is possible to get a free credit report from Equifax, as well as the other two major credit bureaus, Experian and TransUnion. ... Read Full Answer >>
  5. Do free credit reports affect your credit score?

    Free credit reports do not impact your credit score. Credit inquiries are divided into two categories: soft inquiries and ... Read Full Answer >>
  6. Does a free credit report show your credit score?

    The free credit reports available from the three credit reporting agencies do not include your credit score. Under the 2 ... Read Full Answer >>

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